Ok, I can't resist.
IDC just published the storage market results for Q3. And, once again, EMC broadly improved its position across the board in terms of market share.
I'm going to avoid the temptation to indulge in a whooping victory dance here, even though I think we might deserve one. Instead, I'd like to use this post to explore some of the industry trends that I believe are contributing to EMC's success in this arena.
First, some context ...
Storage hardware has been less than half of EMC's business for quite some time now. Even though everyone still sees us as a storage company (hopefully a good one), we think of ourselves an information infrastructure company. See a previous post here.
Second, there is endless quibbling in the industry around the IDC numbers. HP doesn't like the way IDC keeps score. NetApp doesn't like the revenue numbers, so they focus on capacity numbers. And so on. See a previous post on this topic here. Lots of creative spin here, including IBM's. Note how they claim success against lots of vendors, except ... well ... EMC.
Third, like any good Monday morning quarterbacking, there's lots of explanations of what happened, depending on which side you're rooting for. My biases are kind of obvious in this regard -- you've been warned.
What The Results Showed
IDC's press release shows the basics -- the overall storage market grew, EMC extended its lead in many categories, and so on. Another view is here.
If you don't have a subscription to IDC's storage tracker, you don't get the cool spreadsheet that really lets you have fun with the numbers.
Here's the highlights:
- EMC continued to rank #1 in most IDC categories, including: External Storage, External RAID, Networked Storage, Open SAN, NAS, and Windows & Unix External RAID -- so we're leading in most categories, except market segments like mainframe storage, where IBM is ahead.
- EMC was ranked #1 in the NAS market for the tenth straight quarter with a 38.1% revenue share versus #2 ranked Network Appliance at 30.2%. Yes, that's true. I think NTAP writes better press releases than we do, or at least they're not daunted by the facts.
- EMC revenue growth in External Storage, External RAID, Networked Storage, Open SAN, and NAS outpaced overall growth in each market segment on a sequential and year-over-year basis -- so EMC is growing faster than the market, which means we're taking share from others.
- The iSCSI SAN market grew 108.4% y/y to $145M in Q3 '06. While IDC's published estimates rank Network Appliance #1 with a 21.5% revenue share, EMC/Dell (EMC plus the portion of Dell's revenues that IDC estimates to be EMC CLARiiON arrays) actually ranks higher
with a 23 .9% share. So that would make EMC #1 in iSCSI, even though the market perception is different.
The other thing that surprised everyone (except us) was the resurgence of high-end storage. IDC even commented on it in their press release, as follows:
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There was a marked increase in average size and selling price for disk storage systems in the third quarter, particularly for systems selling between $50,000 and $300,000," said Brad Nisbet, program manager with IDC's Storage Systems Program. "IDC believes these larger systems are being fueled by a variety of drivers, including the consolidation that results from increased server virtualization, branch office consolidation, and a new wave of organizations looking to store vast amounts of fixed content.
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I would disagree with Brad on the root cause as to why this is, explained below.
BTW, our own numbers show that EMC has about 44% of the high end market, with Hitachi at 33% and IBM at 22%. Not only did we see strong growth in DMX, but we think we picked up more than four points of market share.
So, what's going on here?
Sure, we've got great products. I won't drag you though the gory details. Let's just say that the products are very competitive, very well-sold and very well-supported. But that's hardly unique to EMC, and it's not the whole story, in my mind.
I think the simple fact is that EMC does more with storage than anyone else.
We qualify it better with different servers, operating systems and databases.
We network it better.
We tier it better.
We backup and recover better.
We replicate it better.
We manage it better.
We archive it better.
We implement ILM on it better.
We do all sorts of clever things with storage that other folks don't do, or they only do a bit of. It's a pretty exhaustive list.
One of the big things that I think the industry pundits miss is that storage is pretty hard to understand in a stand-alone context. Yes, hard metrics like performance, cost, reliability, density, etc. have their place, but -- in the broader picture -- it's pretty arcane stuff.
In the real world, storage is used with other things -- servers, archiving, business continuity, resource management, etc. And EMC has invested consistently to make sure that customers can do more with EMC storage than with the other guys' stuff.
But that doesn't explain the resurgence of high end ...
So, why are high-end arrays so popular again?
If you remember conventional wisdom from a few years ago, it was all about tiering your storage, which -- at the time -- implied using different kinds of arrays to get to different service levels and cost points.
Well, over time, many shops experienced a form of storage array proliferation. On the way to saving money, they ended up with multiple styles of storage device management, new challenges in getting the right information to the right array at the right time, and -- if you were signing up for remote replication -- you could be facing lots of different replication tools, one from each kind of storage array.
One customer a few years back put it to me simply: "yes, I've saved money on storage, but I now am spending more money on operational costs".
High end arrays have changed substantially in the last few years. EMC's DMX-3 not only can scale to outrageous capacities, but it can tier service levels (and costs) within the same frame at the same time.
As I tell people, a 500GB drive costs pretty much the same whether it lives in a Symmetrix, a CLARiiON, or something else. What you're paying for is the infrastructure (the array) for it to live in.
Well, it just so turned out that a reasonably sized DMX-3 turned out to be less cost than buying multiple mid-tier arrays. We're not just talking comparisons between EMC products; I'm talking cheaper than most stuff you can buy on the market and you'd trust your data on.
Depending on your situation, about the time you bought you fourth or tenth mid-tier array, you'd already paid the same as getting a single high-end array.
And, when you looked at the ease of management, and the very powerful replication for everything on the frame, and the capability to move information around between service levels easily and automatically, most people said -- "jeez, why am I killing myself?".
And they went out and bought bigger DMX-3 units, instead of multiple mid-tier arrays.
Maybe you're convinced that it's all a market scam. Well, nice theory, but I don't think we're that smart, and I don't think that customers are that dumb.
So what's ahead?
I think I owe you an additional post on what's really happening (at least from my perspective) with iSCSI and the broader topic of IP storage. It's gaining traction in the market, but the dynamics are interesting, at least in my opinion.
I also think the lines will blur before long between what was once considered high-end and mid-tiered storage. I think we'll see architectures that make the traditional categories more and more irrelevant. As an example, if you can cluster multiple mid-tier arrays into a large configuration, and (this is the hard part) it then behaves exactly like a high-end storage array, what do you call it?
I also think there are important use cases (albeit narrow) where massive consolidation of storage (a-la-DMX) just don't make sense; either technically or economically. I think this will be worth writing about at some point.
Regardless of whether you agree with my reasoning above, it's hard to deny that EMC is doing pretty well in the storage business, even though we've evolved to be something else.
I can only say 'thank you" to all of you who are EMC customers, and can only hope we continue to earn your business in the future.
Let's see what the future brings.
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